Putting Money on Bill Perkins’s Prop Bets is a Terrible Idea

Any time large sums of money are wagered, controversy is almost inevitable. Even within the relatively tightly-controlled worlds of casino gambling and regulated online poker, cries of “foul” are a regular occurrence. When it comes to weird, high-stakes proposition bets made between private individuals on the outcome of one-off events… well, then what’s actually surprising is when the bet ends up being settled amicably and without fuss.

In the wee hours of the morning on March 31, social media personality Dan Bilzerian arrived in Los Angeles on his bicycle, having left Las Vegas approximately 32 hours before. In so doing, he’d won a bet he’d made with hedge fund manager Bill Perkins, who is well known both as a whale at the poker tables and for making bets with other people in the high-stakes gambling community, often with terms which are as ludicrous as the amounts of money involved. The deal with Bilzerian was relatively sober as far as Perkins’s bets go; Bilzerian simply had to make it from Las Vegas to Los Angeles (approximately 300 miles) in under 48 hours, traveling by bicycle under his own muscle power. The bet was for $600,000, but Bilzerian reportedly took at least another $400,000 in action from other parties, so his potential winnings or losses were in excess of $1 million.

Given that he arrived 16 hours ahead of the deadline, the outcome would seem cut and dried, and yet even here, doubts have been raised. What’s unusual in this case is not that there is controversy – since that is inevitable, as I said to begin with. Rather, what strikes me about the story is that Perkins himself has said repeatedly that Bilzerian won the bet fair and square, and that he will pay up with no further questions asked. The complaints, then, are coming not from anyone directly involved in the original bet, but rather a seemingly large number of people who had booked their own action and taken Perkins’s side.

Preparing for this article, I found it easy to come up with a list of similar bets that have either happened in my time as a poker writer or were sufficiently noteworthy that they’ve become the stuff of poker legend… but I couldn’t for the life of me think of one in which the challenge was failed. I asked my fellow PartTimePoker contributor Steve Ruddock if he had an example, and the only one he could come up with was Huck Seed betting Phil Hellmuth that he could spend 24 hours standing shoulder-deep in the Pacific Ocean. Seed gave up on that one after only three hours, but it’s the sort of exception that proves the rule.

There are a couple of fairly easy explanations for why this is the case. First of all, most people have a fairly decent understanding of their own physical capabilities. People can overestimate themselves, certainly, but you’d still expect someone to know their own body better than anyone else can guess just by looking at them. You’d also expect that the more money is on the line, the more incentive there is for people to swallow their egos and be realistic in their self-appraisal. Usually, you’d also guess that the other party in the bet is aware of this; although it does happen that people make these bets believing that they’ll win, there are also many cases in which they know they’ll be losing their money, and are effectively paying the other person to perform the feat in question for the entertainment value of watching it happen.

This is certainly the case with a lot of the bets made by Perkins in particular. It’s important to remember that although he plays in high roller tournaments alongside some of the best players in the world, Perkins is not a professional gambler in the usual sense. He’s made his fortune as a venture capitalist, which is of course a financially risky activity and could fairly accurately be described as a kind of gambling, but one doesn’t get the sense Perkins takes the same approach to poker and betting that he does when deciding whether to invest in a startup.

Bilzerian’s bet had less potential for hilarity than Esfandiari’s, and definitely presented some chance for failure due to injury, overconfidence or poor planning on Bilzerian’s end. Even so, it seemed to me – and to many others – that it was going to be on the easy side. Even if you assumed that Bilzerian would leave himself a rather generous eight hours for rest and sleep in the middle of the ride, he would only need to travel at an average pace of 7.5 miles per hour (12 kph) to make it 300 miles in the allotted time. That’s a pretty leisurely pace on a bicycle. The only thing stopping me from declaring it a slam dunk for Bilzerian at the time was uncertainty about what it would be like biking through the Nevada desert, but by all accounts, it’s actually rather comfortable down there in the late winter / early spring, especially given that Bilzerian had relatively free rein to start his attempt at a time of his choosing and could therefore wait for the perfect forecast to present itself.

Indeed, the outcome of the bet shows pretty clearly how lopsided it really was. Bilzerian didn’t just complete the challenge comfortably, he did it in only 2/3 of the time given to him. There are some activities that contain enough uncertainty that being off by 33% would qualify as a decent estimate, but cycling times and distances are much more predictable, and I’m sure Perkins could have negotiated a considerably stricter time limit with Bilzerian or at least attempted the ride himself first to get a feel for it, if having a good shot at winning the bet had been his intent. Nonetheless, no sooner had the bet been announced than people started booking their own action; I saw more people attempting to bet on Bilzerian than taking Perkins’s end, but evidently some of them managed to find takers.

The controversial van

What’s contentious about Bilzerian’s performance is that he spent a substantial portion of the trip drafting behind a van which was being used to film his ride. The terms of the bet specified that any sort of support vehicle was permitted, but that Bilzerian’s bike must be propelled by his own muscle power. This made the subject of drafting pretty vague; on the one hand, the spirit of the rules seemed to be simply that Bilzerian couldn’t be pulled or pushed by another vehicle, but on the other, an artificially-created tailwind definitely changes the forces acting on the bike. Presumably, adding a sail to the bike wouldn’t have been okay, so it’s unclear where or how to draw the line.

Although Perkins was initially okay with the van being used in this manner, he was eventually put under enough pressure by others who had money riding on the event to ask Bilzerian to stop. Bilzerian obliged, and went without any vehicle leading the way for the final third of the trip. That wasn’t enough for those who felt that drafting behind the van was cheating, of course; it’s not much consolation to feel that someone you bet against was only cheating part of the time, after all.

The version of the terms of the bet being circulated is false, and that the real terms specified only that Bilzerian’s bike must be propelled by his own muscle power, not that “no form of assistance” is permitted.

Motorized support vehicles were explicitly allowed, with no stipulations as to type, number, or how close they could drive.

Perkins had no personal objection to the use of the van, but was pressured by others to do something about it.

Bilzerian beat the deadline by such a large margin that there’s no chance that the drafting influenced the final outcome.

Bilzerian managed a faster pace on the final 100 miles without the van than what he’d been doing prior to that.

Perkins has paid up, and unless otherwise specified, bets placed on the outcome by third parties should be assumed to be on the same terms as the main bet between Perkins and Bilzerian.

Aside from semantic quibbling about whether the drafting effect constitutes a reduction in wind resistance or a suction on the bike, there’s little to argue with in Rast’s assessment of the situation. What surprised me, however, is something Rast mentions at the beginning of his post: that although he claims to have been impartial at the time the terms were negotiated and he was named arbitrator, he proceeded to place bets of his own on Bilzerian a week later. Given how freely he admits this, I can only assume that Bilzerian and Perkins were both aware that Rast was going to be doing this, and were okay with it, but I find this staggering.

Having exchanged a few tweets with Rast, I realize this isn’t quite as insane as it sounded to me initially, because he was only involved in facilitating the pre-bet negotiations and wasn’t retained as an adjudicator in the case that the bet’s outcome ended up being disputed. Rast claims that there was no conflict of interest present at the time of negotiations because he hadn’t yet placed any bets of his own at that time. Of course, no one except Rast knows what he was intending at that time, and humans being the creatures that we are, Rast himself may not be fully aware of his motivations either; that said, if Rast knew at the time of negotiations that he would be allowed to place his own bets and had a reasonable expectation that he might exercise that right, then it can’t be said that he was really impartial. If he thought he’d probably be betting on Bilzerian, he’d naturally want to negotiate terms that favored him, regardless of whether his money was actually locked in at that time or not. This is pretty basic economics, and given the amount of money on the line, I’d be surprised if it’s actually the case that none of the three realize this.

Regardless, Perkins and Bilzerian were within their rights to make the bet, to choose Rast to help them negotiate, to allow him to then make his own bets on the outcome, and even to go forward without anyone selected as an impartial adjudicator in the case that one party wanted to dispute the outcome. Bilzerian and Perkins clearly have enough money that $600,000 doesn’t mean to either of them what it means to most of us, so trusting in mutual goodwill and the importance of their respective public image to see the bet through to a satisfactory conclusion may in fact have been a reasonable approach. That does not, however, mean that it was a safe or smart thing for anyone else to be betting on.

Getting in the game

Between the facts that physical prop bets are almost always completed successfully and that the challenge in question didn’t actually seem that difficult, and the relative lack of legal formalities surrounding the bet, I don’t know how anyone thought putting their own money on Perkins’s side was a good idea. And yet, it seems many people have done so, and are now upset about having lost their bets.

Obviously, when a high-profile bet like this happens, it’s exciting for those who enjoy watching the lives of high rollers. It’s natural, then, to want to get in on the game; after all, if professional gamblers interest you, you’ve probably got a bit of the gambling spirit yourself, and so having a personal stake in things makes them more fun to follow. That said, if you’re going to take Perkins’s side in any future prop bets, you should do so with the understanding that you’re probably just lighting money on fire.

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